The big story for the Outer Banks Market as we inch closer to the end of the year is the decline in the number of homes selling, and the slight rise in inventory. Here’s what we have:
- Year over year November sales are down 25%
- Annual sales are down 5%
- Year over year November under contract is down 12%
- Inventory is up by 5%
- Sales in Corolla are down 12% overall this year
This is a dangerous combination. With sales going down and inventory rising, it could certainly lead to another pricing correction for the market overall.
I get a lot of people asking why the Outer Banks market, specifically Duck and Corolla, has not recovered. The primary reason is inventory. Prices simply cannot rise when the market is carrying nearly 2 years of inventory.
I also want to offer a quick reminder of what typically happens in these cycles. When we look at recorded history, it shows that these kinds of market cycles take 20 years from start to finish. If we consider the main effects of the 2005 market crash started here in 2008. That puts us only half way through. There is nothing abnormal about this when nearly 100 years of history shows the same time frame through each experience.
I’ll tell you a quick story. In 1988, a client bought a home in Sanderling for $345,000. This was the top of the market for that time. There had been a correction in 1986, yet didn’t affect the Outer Banks until 1988. Shortly after his purchase, the market sharply corrected. Ten years later, in 1998, I sold his home for the exact same price he paid. Minus his selling expenses and various repairs, he did not come out ahead. Fast forward to 2004, and that same home was offered nearly $600,000. That’s how quickly things changed.
The point is, we are only half way through this cycle. We are not experiencing the comeback of prices just yet. It will happen again, as it always does, but it’s not likely to take place in less than 5 to 7 years from now. That’s just how long these cycles take, and this one is particularly challenging due to the continued high inventory levels.
If you are thinking of selling, either have patience for another decade to pass, or go ahead and sell it now for what the market will allow. Just remember, in another 10 years the home will be that much older and that much more maintenance required.
Nearly every day I speak to a seller who says, “We don’t HAVE to sell it.” And yes, that’s true. 99% of the clients I work with are not in financial distress and truly don’t HAVE to sell it. I encourage you to also ask this next question. Just because you don’t HAVE to sell it, doesn’t mean that IT ISN’T the best financial move for you. Really consider the big picture of keeping the home another 10 years, versus the disappointment of the price the market mandates at this time. In the end, if you don’t HAVE to sell and don’t want to participate in today’s pricing, the truly best thing you can do is take the home OFF the market, which will help inventory levels go down. That will help everyone in the long term.
As always, if I can be of further assistance to you, please reach out!
